Probation must be expressed as a term
of the employment contract. When hiring an employee who will
be probationary for a period of time, it is important that
the employees’ probationary status be set out in either the
employment contract or the offer letter prior to the employee
commencing work. This is because a probationary term will
not be implied into an employment contract. There must be
an agreement between the employer and the employee that the
employee will be subject to a probationary term. While many
employees will not object to being on probation others may
not wish to do so, especially if they are being recruited
away from a secure position by the new employer. Thus, probation
may be a subject of negotiation between the employer and employee.
As with other contractual terms, it is advisable to reduce
the probationary term in the contract to writing, so there
is no dispute later on.
When drafting the employment contract or
offer letter, it is important to specifically use the term
“probation.” For example, a reference in an employee handbook
to a “ninety day introductory period for all employees” will
likely not suffice to create probationary status. Likewise,
a statement in the offer letter providing “your employment
will be reviewed at the end of six months in accordance with
company policy” will also likely not suffice to create a probationary
term, as such wording would not be considered sufficiently
clear to the employee that he is she is on a probationary
status.
C.
LENGTH OF PROBATIONARY TERM
The common law does not impose any limit
on how long a probationary period may be. However, many employers
choose a three month probationary period, as this period often
coincides with the eligibility for group benefits. Also, while
the Employment Standards Act, 2000 (Ontario) (“the
ESA”) does not create a probationary status for employees,
it does provide that no minimum pay in lieu of notice is required
for employees with less than three months of service. After
that three month period of service, the minimum notice requirements
for termination of employment under section 57 of the ESA
become operative.
Therefore, it is important to note that
should the employees probationary period exceed three months,
the probationary employee may not be terminated without providing
at least the minimum notice, or pay in lieu thereof provided by the ESA. For example, if a probationary
term of six months is agreed to between the employer and employee
and the employer wishes to terminate the employee after five
months, the employer will be required to provide, at a minimum,
one week of notice or pay in lieu at the time of dismissal.
D. DRAFTING THE PROBATIONARY TERM CLAUSE IN THE OFFER LETTER
OR EMPLOYMENT CONTRACT
Careful thought must be given to drafting
a probationary clause that will comply with the ESA and will
protect the employer from wrongful termination claims in the
event that the employee is terminated during the probationary
term. The purpose of the probationary term should be set out
in the letter or contract. As well, the clause should provide
that the employer may terminate the employment without cause
or any form of termination payment within the first three
months of probation and may terminate employment after the
three months of probation by providing the minimum notice
or pay in lieu of notice provided by the ESA.
There have been cases in Canada where probationary
employees who have been terminated have successfully sued
their employer for wrongful dismissal. Because of their typically
short terms of service, the amounts awarded for successful
wrongful dismissal claims by terminated probationary employees
have not been that high compared to longer term employees.
However, there have been cases where employees have been awarded
six months damages at common law, which, depending on the
employees pay, could represent a substantial liability to
the organization. Typically, these damages awarded of several
months have been awarded in cases where the employee was recruited
from other secure employment and suffered prolonged unemployment
after termination.
E. THE EMPLOYER'S DUTIES TO PROBATIONARY EMPLOYEES
The hiring of an employee on a probationary
term by no means absolves an employer from legal duties with
respect to that employee. As noted above, the provisions of
the ESA apply to that employee, notwithstanding that there
is no requirement to pay termination pay under the statute
during the first three months of work. Additionally, various
judicial decisions have found that an employer has the following
duties:
·
Management must assess the employee in a manner
that is not arbitrary, discriminatory or in bad faith;
·
The employer must impose reasonable standards
of conduct and the employee must be measured against the standards
which are made known to the employee;
·
The employee must be provided with a fair opportunity
to demonstrate his or her ability to do the job;
·
The employer must provide a fair, honest and
valid assessment of the employee’s competence and suitability
for ongoing employment.
Should the employer fail to meet any of
the above duties, it may be faced with a wrongful termination
claim. Absent a term in the employment contract stating otherwise,
an employer cannot terminate a probationary employee without
just cause. While the test for just cause for probationary
employees is lower than that of a regular employee, the employer
still bears the onus of proving that just cause existed for
termination.
F. STANDARD OF CAUSE ON TERMINATION OF PROBATIONARY EMPLOYEES
The test with respect to the termination
of an employee who is still within the probationary period
was succinctly expressed by Noble J. of the Saskatchewan Court
of Queen’s Bench in Ritchie v. Intercontinental Packers
Ltd. (1982), 14 Sask. R. 206, at p. 212:
